Section 138 cheque liability after settlement can support prosecution where the debt is crystallised and notice is proper.

Complaints under Section 138 of the Negotiable Instruments Act were examined in the context of cheques issued after successive compromise settlements. The Gujarat High Court noted that the settlements quantified the parties' liability, including an augmented claim and a later bifurcation of the cheque amount from legal fees, and treated the post-settlement cheques as issued in discharge of a legally enforceable debt. It also considered that the statutory notices were properly issued after dishonour and that prior failed settlement attempts did not bar prosecution at the threshold. The complaints were therefore treated as maintainable, and process was not interfered with.

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Issues: Whether the complaints under Section 138 of the Negotiable Instruments Act, 1881 were maintainable on the basis of the cheques issued pursuant to successive settlements, and whether the statutory notices and the amount claimed disclosed a legally enforceable debt.

Analysis: The petitions arose from dishonour of cheques issued after multiple compromise and settlement agreements between the parties. The Court noted that the original claim of Rs. 75 lakhs had been augmented by an additional Rs. 10 lakhs under a duly executed settlement, and that the later statutory notice bifurcated the cheque amount from the claim for legal consultation or advocate fees. It further held that the subsequent cheques were issued in pursuance of settlements that crystallised the liability into an enforceable debt, and that the complaints could not be rejected at the threshold merely because the matter arose from compromise arrangements. The Court distinguished the relied-upon precedent on the ground that, in the present matters, the complaints were filed only after failure of the settlement arrangement and dishonour of the later cheques.

Conclusion: The complaints were maintainable, the cheques represented a legally enforceable debt, and the challenge to issuance of process failed.

Ratio Decidendi: A cheque issued pursuant to a concluded settlement, which quantifies an admitted liability and is followed by dishonour and a proper statutory notice under Section 138, can form the basis of proceedings for a legally enforceable debt even if earlier settlement attempts had failed.

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